HELP LEGRAND STUDENTS!! Trying to formulate offer - Posted by Pat

Posted by Maurice (Ca) on May 27, 1999 at 12:53:07:

If the ARV you mentioned here is accurate, then it’s time to PARTY. This is one of those rare deals where the offering price is at or below MAO. Again, I would just double check the ARV. But the one thing I found out through experience, is that sometimes the realtor’s comps are a little bit on the high side. But if you found similar properties in the neighborhood that recently sold that supports that figure, then go for it. Sounds like a great opportunity here for you to make a good profit.

As Jim mentioned, never pay MAO, but in this case, MAO is actually higher than the listed price.

Again, just my thoughts…

p.s. again, the realtor is getting a commission…it’s her job, however if you want to pay her more money, then that’s on you.

HELP LEGRAND STUDENTS!! Trying to formulate offer - Posted by Pat

Posted by Pat on May 27, 1999 at 10:44:02:

Any of LeGrands students out there? I need some advice on
trying to formulate an offer for a wholesale property. The
house was first priced at 39,900 and since then has gone down to 25k. The seller is very motivated. The house will need around 15k to repair. My question is where in the equation do I put what I am going to offer for the house. I am going to offer around 18,900 for it. I had figured that the cost including my profit would amount to 20k (I hope I am figuring this out right)I am using the percentages that he shows in his course. Also since I am using a realtor to pull up comps for me, how much should I pay her to do that and to present the offers. I really don’t want to blow this
deal. I feel that I have a hot one here seeing that the seller has gone down on the asking price. Any help would be
greatful.
Pat

Have to know what the after repaired value is in the neighborhood is. - Posted by chris

Posted by chris on May 27, 1999 at 15:49:42:

LeGrands formulas ( from wholesale / retail [ red ] course ) :
ARV 55K or less ------- ARV - $17,000 - repairs = MAO
ARV 55 & up ----------- MAO = ARV x 70% - repairs
If you’re going to flip it , you’ll need to subtract your wholesale profit as well. … Hope this helps.

Why Limit Yourself? - Posted by J.P. Vaughan

Posted by J.P. Vaughan on May 27, 1999 at 15:42:27:

Why limit yourself to advice from LeGrand “students”?
Most of the experienced, professional, successful real
estate investors who contribute to this site are NOT
LeGrand students.

The solution to your scenario isn’t unique to LeGrand.
And I certainly would think twice before taking advice
from other “students.”

JP Vaughan

I think you’re confused… - Posted by Jim Beavens

Posted by Jim Beavens on May 27, 1999 at 14:38:27:

If the house is listed with a realtor, then the commission agreement has already been signed by the seller and the listing agent; thus the commission comes out of the sale proceeds from the seller. If another agent brings a buyer in, then the two agents typically split this commission.

So don’t worry about paying her, just tell her what you’re willing to offer and have her write up the contract and present it ASAP; she’ll get her commission at closing out of the sale proceeds.

Not to sound condescending (I’m new at this myself), but your questions sound very basic. Review your materials again dealing with contracts, and read some books from the library on some basics of real estate transactions.

Re: HELP LEGRAND STUDENTS!! Trying to formulate offer - Posted by Maurice (Ca)

Posted by Maurice (Ca) on May 27, 1999 at 12:40:40:

Here’s a newbie input:

If you figured your MAO is $20k & you’re offering $18,900, then you’re only leaving yourself $1,100 or so to make when you flip it (if that’s your plan). Remember you can go up in price (in your offer), but you can’t go down. But if you’re happy with making that, then put in your offer. I would just double check the ARV (and I came up with $50,000 according to your #'s) & repair costs and if your numbers are correct, then just have the realtor put in your offer.

As far as the realtor, he/she is writing it up for you, so why would you pay them anything more? They’re going to make a commission.

Well again, I’m no expert, but you did address this to Legrand students, so this is just my opinion.

Try this… - Posted by Jim IL

Posted by Jim IL on May 27, 1999 at 12:10:04:

Pat,
Go back to the Legrand Lease/Opion module.
Read the section on figuring M.A.O. (maximum allowable offer), and see the two different formulas.
There is a simpler formula for figuring your offers on homes that are worth $55k and less.
Use that, and remember, as Ron says, “Never pay M.A.O.”.
If the seller is truly motivated, try a LOW offer first. You can never go down, just up, so start low, and see what they say.
They may surprise you and say, “Yes”.
I’d love to tell you what I’d offer, but you left out some vital info.
Such as, "what is the FMV of the home AFTER repairs, A.R.V. (After Repair Value).
You say it needs $15k in repairs.
The formula is in the material, so I won’t breach copyright and do it for you.
And, after you make your offer, stay in control.
Do not make your desire to get a deal make you pay more than you should.
The seller, if truly motivated, will come around. And if they do not,
NEXT!
Another GREAT quote from Ron Legrand:
“some will”
“Some Won’t”
“So What”
"Someones waiting"
The old, SW, SW, SW, SW!
Good luck and let us know how it turns out,
Jim IL

Very well stated JP! - Posted by Mark R in KCMO

Posted by Mark R in KCMO on May 27, 1999 at 19:41:41:

JP,

Another point is though I have read some of Le Grand’s Stuff, I don’t consider myself a Le Grand Student.

I’m a LonnieBrittonVaughnBronchickBehleBeckGarciaKaiserPiperETC

LOL

Mark R in KCMO

Re: Try this… - Posted by Pat

Posted by Pat on May 27, 1999 at 12:36:33:

Hi Jim, The pty is a duplex that can be converted to a
3bdr 2ba home. The Arv is 69k. I am using a realtor and
she told that the house may sell for that or maybe 70k.
By the way what should I pay her as a commission for helping me find comps and possibly present the offer? I am thinking of offering 15k for it. Ron says that if you are not embarassed by the offer then you’re paying too much. But, I just wanted to know where in the offer
do I put in this figure or if I even need too?
Thank for your help Jim
Pat